Beyond bean counting: Establishing high ethical standards in the public accounting profession

Business professions are increasingly faced with the question of how to best monitor the ethical behavior of their members. Conflicts could exist between a profession's desire to self-regulate and its accountability to the public at large. This study examines how members of one profession, public accounting, evaluate the relative effectiveness of various self-regulatory and externally imposed mechanisms for promoting a climate of high ethical behavior. Specifically, the roles of independent public accountants, regulatory and rule setting agencies, and undergraduate accounting education are investigated. Of 461 possible respondents, 230 questionnaires (a 49.6% response rate) indicated that the profession's own rule setting body (The American Institute of Certified Public Accountants) and the use of peer review were perceived as the most effective mechanisms, while government regulation was ranked least. Respondents also evaluated the extent to which ethics should be covered in the accounting curriculum. For every course, the CPAs believed a greater emphasis on ethics is appropriate than presently exists. Suggestions for more effectively integrating ethics into accounting courses are made. Finally, respondents were also asked whether in answering the questionnaire they used a definition of ethics as either the Professional Code of Conduct or a moral and philosphical framework for guiding beliefs. Those who viewed ethics as abiding by a professional code had more confidence in the mechanisms addressed in this study to aid the public accounting profession's ability to ensure high ethical standards of conduct. Methodological implications of this distinction for future studies in business ethics are discussed. Jeffrey R. Cohen is Assistant Professor of Accounting at Boston College. He received his Ph.D. from The University of Massachusetts at Amherst. He is a C.M.A. and a Peat Marwick Research Fellow. His articles have appeared in the Journal of Accounting Research, Decision Sciences and The Organizational Behavior Teaching Review. His work on Ethics has appeared in Issues in Accounting Education, Management Accounting, and The CPA Journal. Laurie W. Pant is Assistant Professor of Accounting at Boston College. She holds an M.B.A. and a D.B.A. from Boston University and an M.Ed. from Emory University. She serves on the editorial board of Issues in Accounting Education. Her articles on Ethics have appeared in Issues in Accounting Education, Management Accounting and The Organizational Behavior Teaching Review.An earlier version of this paper was presented at the 1989 American Accounting Association National Meeting.     

Does your religion make a difference in your business ethics? The case of consolidated foods

While the literature in business ethics abounds with philosophical analyses, perspectives from religious thinkers are curiously underrepresented. What religious analysis has occured has often been moralistic in tone, more fit to the pulpit than the classroom or the boardroom. In the three essays that follow, presented originally at a panel at the Annual Meeting of the American Academy of Religion in 1989, ethicists from the Protestant, Roman Catholic, and Jewish traditions analyze a case study familiar to many who teach and research in business ethics — the Consolidated Foods Case. Each author shows how a particular religious tradition might react to the case. The authors show how insights from their traditions would affect corporation's moral deliberations about policy. Specific policy recommendations are offered to CEO John Bryan. Louke Siker recieved her Ph.D. in 1987. She has taught Christian ethics and business ethics at Wake Forest University and Loyola Marymount University. Her research interests include methodology in business ethics. She is the author of An Unlikely Dialogue: Barth and Business Ethicists on Human Work, Annual of the Society of Christian Ethics, 1989. James Donahue is an Associate Professor of Theological Ethics at Georgetown University, Washington, D.C. His research and publications focus on methodology in ethics, ethics and institutions, and ethics and the professions. He has published in Horizons, Religious Studies Review, Social Thought, Bioethics Books, and The Annual of the College Theology Society. Ronald M. Green is the John Phillips Professor of Religion in the Department of Religion, Dartmouth College. He also serves as Adjunct Professor of Business Ethics at Dartmouth's Amos Tuck School of Business Administration, where he is responsible for first and second year courses on business ethics. He has written many articles in theoretical and applied ethics. He is the author of three books, Population Growth and Justice (Scholars Press, 1975), Religious Reason (Oxford University Press, 1978) and Religion and Moral Reason (Oxford University Press, 1988). Professor Green is currently working, with Dr. Robbin Derry, on a textbook in business ethics entitled The Ethical Manager to be published by Macmillian.This is a summary of the Consolidated Foods Corporation Case # 382–158, Harvard Business School, 1982. It is used with the permission of its author, Kenneth E. Goodpaster.Author of A Protestant Response to the Consolidated Food Case.Author of A Catholic Response ...Author of A Jewish Response ...     

The institutionalization of organizational ethics

The institutionalization of ethics is an important task for today's organizations if they are to effectively counteract the increasingly frequent occurrences of blatantly unethical and often illegal behavior within large and often highly respected organizations. This article discusses the importance of institutionalizing organizational ethics and emphasizes the importance of several variables (psychological contract, organizational commitment, and an ethically-oriented culture) to the institutionalization of ethics within any organization.... institutionalizing ethics may sound ponderous, but its meaning is straightforward. It means getting ethics formally and explicitly into daily business life. It means getting ethics into company policy formation at the board and top management levels and through a formal code, getting ethics into all daily decision making and work practices down the line, at all levels of employment. It means grafting a new branch on the corporate decision tree — a branch that reads right/wrong (Purcell and Weber, 1979, p. 6). Ronald R. Sims has been an Associate Professor of Business Administration at the College of William and Mary since 1986. He is the author of more than fifty scholarly papers and chapters and these books: An Experiential Learning Approach to Employee Training Systems, and co-author of Readings in Organizational Behavior, and Managing Institutions of Higher Education into the 21st Century: Issues and Implications, both forthcoming.     

Business regulation,business ethics and the professional employee

The differences in business reactions to legal regulation, and the nature of business moralities, are examined through the eyes of an expert group — in-house lawyers. The research indicates that lawyers inevitably provide a degree of control through their technical expertise, but that they also identify strongly with their companies and emphasise shared ethics rather than ethical differences between lawyers and their employers. This can partly be explained by their integration with the company but also rests on the problematic nature of law and regulatory controls in relation to organisations within the community. In-house lawyers therefore reject a policing role in favour of a counselling role. Since they perceive themselves as part of a shared culture of ethics, they also avoid a leadership role. However, the article suggests that the nature of legal judgment should assist lawyers towards such a role, while recognising that organisational statesmanship must be constrained by organisational culture and the wider community culture of ethical standards. Dr Karl J. Mackie is Director of the Centre for Legal Studies in the University of Nottingham, where he lectures in employment law and in management skills development. Lawyers in Business: and the Law Business is published by Macmillan (London) 1989. Dr Mackie is a member of the Business Strategy Network and a consultant in business strategy.This paper has been adapted from Mackie, Lawyers in Business: and the Law Business (1989), (London: Macmillan), ch. 10.     

Christ and business: A typology for Christian business ethics

H. Richard Niebuhr's typology of the relation between Christ and culture can function as a heuristic device to identify different approaches to Christian business ethics. Five types are outlined: Christ Against Business, The Christ of Business, Christ Above Business, Christ and Business in Paradox, and Christ the Transformer of Business. This typology may facilitate discussion on the relative adequacy of various theological assumptions about ethical change in business. Louke Siker received her Ph.D. in Religion and Society from Princeton Theological Seminary in 1987 (dissertation: Interpreting Corporate Cultures: Philosophical and Theological Reasons for Doing Business Ethics in a Hermeneutical Mode). She has taught Christian ethics and business ethics at Wake Forest University and Loyola Marymount University. Her research interests include methodology in business ethics. She is the author of An Unlikely Dialogue: Barth and Business Ethicists on Human Work, Annual of the Society of Christian Ethics, 1989.     

Self-regulating industry behavior: Antitrust limitations and trade association codes of conduct

Self-regulation exists at the firm-level, the industry-level, and the business-level of economic organization. Industry self-regulation has faced economic (free rider) and legal (antitrust) impediments to widespread implementation, although there exist examples of effective industry self-regulation, e.g., securities industry and the SEC, advertising and the FTC. By instituting industry codes of conduct, national trade associations have shown to be natural vehicles for self-regulation. While there has been long-standing general encouragement for establishing industry codes, adopting and enforcing conduct codes has been seriously circumscribed by restrictive Supreme Court decisions and FTC advisory opinions. One approach to clearing legal confusion is to petition the FTC to issue an industry guide on promulgating and enforcing trade association codes of conduct. Another strategy is to utilize a stakeholder approach to association ethics committee appointments that subsequently influence code creation and enforcement. Finally, a new concept of an industry code of conduct will consist of three subcodes: an economic code; an environmental code; and a socio-political code. Combined, these strategic approaches will offer new opportunities for effective nonmarket regulation.Thomas A. Hemphill is affiliated with the Institute of Scrap Recycling Institute, Inc., Washington, D.C. His most recent publications are found inBusiness and Society Review (Fall 1990), A Solid Program for Solid Waste and (Summer 1991), Marketer's New Motto: It's Keen to be Green.     

Ethical theory and practice: Is there a gap?

Archie Bahm argued recently that there is a gap between theoretical and applied ethics, and that those working in applied ethics must assume the burden of bridging it. Evidence of a gap is considerable, but it seems also partly due to much ethical theory having relatively little to offer to those grappling with practical moral problems. Some aspects of utilitarian theory are examined in this connection. Finally it is suggested that other areas of theory developing new models of man may partly bridge the gap and aid those dealing with problems of moral decision-making. John Hoaglund is Professor of Philosophy at Christopher Newport College. He is at present Chairman of Philosophy. He was formerly Lecturer at the Free University of Berlin. He is Fulbright Fellow, University of Bergen, Norway, 1980. He is the author of: The Voluntary One-Parent Family, in A. C. Cafagna et al. (eds.), Philosophy, Children, and the Family, New York, 1982, pp. 43–50 and published several articles on aesthetics in Journal of Aesthetic Education, British Journal of Aesthetics, Zeitschrift für Aesthetik and Allgemeine Kunstkritik, and Studia Estetyczne.     

Questioning the Domain of the Business Ethics Curriculum

This paper reassesses the domain of the business ethics curriculum and, drawing on recent shifts in the business environment, maps out some suggestions for extending the core ground of the discipline. It starts by assessing the key elements of the dominant English- language business ethics textbooks and identifying the domain as reflected by those publications as where the law ends and beyond the legal minimum. Based on this, the paper identifies potential gaps and new areas for the discipline by drawing on four main aspects. First, it argues that the domain of business ethics requires extensions dependent on the particular geographic region where the subject is taught. A second factor for broadening the scope is the impact of recent scandals, which arguably direct the focus of ethical inquiry towards the nature of the business systems in which individuals and corporations operate. Third, the impact of globalization and its result on growing corporate involvement in regulatory processes is discussed. Fourth and finally, business ethics reaches beyond the traditional constituencies of economic stakeholders as new actors from civil society enter the stage of ethical decision making in business. We conclude by suggesting that a reconsideration of the domain of business ethics, especially in Europe, is timely, but that to do so represents a major challenge to business ethics educators.     

Reactions to ethical dilemmas: A study pertaining to certified public accountants

This study discusses how perceptions of ethics are formed by certified public accountants (CPAs). Theologians are used as a point of comparison. When considering CPA ethical dilemmas, both subject groups in this research project viewed confidentiality and independence as more important than recipient of responsibility and seriousness of breach. Neither group, however, was insensitive to any of the factors presented for its consideration. CPA reactions to ethical dilemmas were governed primarily by provisions of the CPA ethics code; conformity to that code may well be evidence of higher stage moral reasoning.Gregory A. Claypool is Associate Professor of Accounting and Finance at Youngstown State University.David F. Fetyko is Professor of Accounting at Kent State University. Michael A. Pearson is Professor of Accounting at Kent State University. He is the author of Enhancing Perceptions of Auditor Independence, Journal of Business Ethics 4 (1985), 53–6, and Auditor Independence Deficiencies and Alleged Audit Failures, Journal of Business Ethics 6 (1987), 281–7.     

The kitchen and the multinational corporation: An analysis of the links between the household and global corporations

The paper examines relationships between multinational corporations and the unwaged work women do in their homes. It is argued that far from being a sanctuary, the home has become a dumpsite for unnecessary and unsafe products. Women in North America and the Third World are now dealing with health and safety issues in their neighbourhoods and households. Consciousness of these dangers has resulted in mobilization and the formation of alliances aimed at confronting multinationals and securing more government regulation. The experience of one group of women in a small Ontario community is described. Harriet Rosenberg is Assistant Professor in the Social Science Division at York University. She is the Principal Investigator of a SSHRC Grant for her Aging and Caregiving in an African Population. She is the co-author of Through the Kitchen Window: The Politics of Home and Family, with M. Luxton, Network Basic Series, Garamond Press, Toronto; and co-author with M. FitzGerald of Surviving in the City: Urbanization in the Third World, Oxfam, Toronto.Paper presented at Women and the Invisible Economy Conference, Institute Simone de Beauvoir, Concordia University, Montreal, Quebec, Feb. 22, 1985.     

Corporate ethical consulting: Developing management strategies for corporate ethics

The increase of scandals in the business sector is forcing many companies to examine their corporate ethical behavior with a view toward rebuilding their corporate value system. This article describes how value-system reconstruction must proceed in a company and demonstrates that corporate ethics can only become plausible if based on a corporate ethical ethos. It outlines a five-step development plan of management strategies toward rebuilding a company's value system on this corporate ethos through: corporate policy and strategy reformulation; corporate ethical code promulgation and value-statement formulation; management ethical training and corporate ethical education; and corporate ethical performance evaluation. The role of the corporate ethical consultant is also outlined to illustrate how corporate ethical consulting can provide the specialized services designed to insure an enduring management ethical upgrading and to improve a company's corporate ethical performance record. The discussion indicates how corporate ethical consulting promotes good business through its capacity to deliver industry credibility and company security. Richard Guerrette is a Research Fellow at Yale University Divinity School, where he is conducting a research study in organization management process and corporate ethics. He is also a Lecturer in sociology at the University of Connecticut at Hartford and is an author of two books on ecumenical ministry and social movement organization in the church. He has published extensively in theological journals and has recently contributed an article on Environmental Integrity and Corporate Responsibility for the Journal of Business Ethics 5 (1986). He is the Director of Equipax, an organization/management consulting service in Farmington, Connecticut.     

What is business in America?

This paper, presented at the Conference on Value Issues in Business at Millsaps College, is divided into three parts. The first sketches the logic of the evolution of U.S. business and suggests reasons for its remarkable success. The second assesses the power of U.S. business in modern society, both from an economic and political perspective. The third attempts to formulate the underlying philosophy of U.S. business using ideals such as the work ethic, entrepreneurism, democracy, and equality. Some of these ideals, the paper suggests, are irreconcilable. Thomas J. Donaldson is Associate Professor of Philosophy at Loyola University of Chicago. His publications in the area of business ethics include numerous articles and two books, Ethical Issues in Business co-edited with Patricia Werhane, and Corporations and Morality.     

The Usefulness of Social Norm Theory in Empirical Business Ethics Research: A Review and Suggestions for Future Research

In response to recent calls to extend the underlying theories used in the literature (O’Fallon and Butterfield in J Bus Ethics 59(4):375–413, 2005; Craft in J Bus Ethics 117(2):221–259, 2013), we review the usefulness of social norm theory in empirical business ethics research. We begin by identifying the seeds of social norm theory in Adam Smith’s (in: Raphael and Macfie (eds) The Theory of Moral Sentiments, the Glasgow Edition, Oxford University Press, Oxford, 1759/1790) seminal work, The Theory of Moral Sentiments. Next, we introduce recent theory in social norm activation by Bicchieri (The grammar of society: The nature and dynamics of social norms, Cambridge University Press, New York, 2006) and compare the new theory to two theoretical frameworks found in the literature: Kohlberg’s (in: Goslin (ed) Handbook of socialization theory and research, Rand McNally, Chicago, IL, 1969; in: Lickona (ed) Moral development and behavior, Holt, Rinehart & Winston, New York, 1976) theory of moral development and Cialdini and Trost’s (in: Gilbert et al. (eds) The handbook of social psychology, Oxford University Press, Boston, 1998) taxonomy of social norms. We argue that the new theory provides useful insights by emphasizing the ability of situational cues and information to generate common expectations for social/moral norms. The theory is particularly useful for empirical research in business ethics because it gives both organizational and individual factors a role in motivating norm-based behavior. To demonstrate this usefulness, we present examples where the theory has been effectively applied in experimental accounting research to generate new insights. We conclude by citing specific examples where the theory may prove useful in empirical business ethics research.     

Management priorities and management ethics

The management process affects the level of ethical performance in organizational life. As one part of this process, managers establish priorities which give direction to an organization. In business firms, management typically stresses the attainment of profits and other related economic and technical factors. Since little explicit recognition is given to ethics, the resulting climate makes it easy to ignore ethical factors. Changing this situation by making ethics a significant part of the corporate culture is difficult and requires a combination of management communication and management example. However, managers who choose to emphasize ethics and who skillfully articulate their importance can improve the integration of ethics into the day-to-day operating decisions of the firm. Justin G. Longenecker is Chavanne Professor of Christian Ethics in Business at Hankamer School of Business, Baylor University, Waco, Texas 76798, U.S.A. His most important publications are: Management, 6th ed. (Charles E. Merrill Publ. C., Columbus 1984), co-authored with Charles D. Pringle; Small Business Management, 6th ed. (South-Western Publ. Co., Cincinnati 1983), co-authored with H. N. Broom and Carlos W. Moore; and numerous journal articles, including: The Ethics of MBO, Academy of Management Review (April, 1982), pp. 305–312, co-authored with Charles D. Pringle.     

General causal models in business ethics: An essay on colliding research traditions

The construction of causal models for research in business ethics has become fashionable in recent years. This paper explores four recent proposals, comparing and contrasting their views. The primary purpose of this paper is to expose several confusions inherent in such models and to account for these errors in terms of a failure to distinguish between models as theories and models as representing a research tradition. We conclude with a brief set of recommendations for linking two major research traditions in business ethics: empiricism and ethical theory.F. Neil Brady is Professor of Management at San Diego State University. He is the author ofEthical Managing: Rules and Results (Macmillan, 1990) and numerous articles on business ethics. His research focuses on the application of ethical theory to business decision making.Mary Jo Hatch is an Associate Professor at San Diego State University and visiting Associate Professor at the Copenhagen Business School in Denmark. Her research interests include the link between business ethics and organizational culture, and humor in management teams. She has published articles on organizational culture and the behavioral and symbolic aspects of organizations as physical structures.     

Corporate responsibility and corporate personhood

In this paper, I consider the claim that a corporation cannot be held to be morally responsible unless it is a person. First, I argue that this claim is ambigious. Person flags three different but related notions: metaphysical person, moral agent, moral person. I argue that, though one can make the claim that corporates are metaphysical persons, this claim is only marginally relevant to the question of corporate moral responsibility. The central question which must be answered in discussions of corporate moral responsibility is whether corporations are moral agents or moral persons. I argue that, though we can make a case for saying corporations are moral agents, they are not moral persons, and hence, we can hold them responsible. In addition, we need not treat them the way we would be obligated to treat a moral person; we needn't have the same scruples about holding a corporation morally responsible as we would a moral person. Rita C. Manning is Lecturer at California State College, San Bernardino. She has published in Southern Journal of Philosophy and in Informal Logic.     

Economics as ethics: Bastiat's nineteenth century interpretation

Frederic Bastiat was an influential economic writer of the middle 1800s. In his work,Economic Sophisms (1848), Bastiat proposed a dual system of ethics, containing economic ethics and religious ethics.Bastiat first described the tendency of individuals toward plunder as a means of satisfying their economic needs. Men, he held, could work and produce what they needed by toil, but history had shown that men preferred to take what they could from others who had toiled. Bastiat identified two main types of plunder — force and fraud.Bastiat held that appeals made by philosophers over the centuries had done little to stop plunder. He believed that the best way to reduce physical and moral aggression was by educating individuals to the harmful effects caused by violent and fraudulent behavior.Thus, Bastiat proposed two systems of ethics — economic ethics and religious ethics. Under his system of economic ethics, Bastiat suggested that the recipients of maleficent actions could be stimulated to resist the actions when they were made aware of the true social costs caused by the oppressors. Under his system of religious ethics, Bastiat thought that the perpetrators of maleficent actions could be dissuaded from performing the actions by appealing to their sense of justice and morality.M. G. O'Donnell, Professor of Economics at the University of Southwestern Louisiana, is the author of various articles on early contributions to the discipline of economics, specifically on the writings of Harriet Martineau, Charlotte Perkins Gilman and Henry Sidgwick which have been published in theJournal of Economic Education, theSocial Science Quarterly and theHistory of Political Economy. She has written various articles on educational techniques which have been published in theJournal of Economic Education andSocial Studies, and is the author ofThe Educational Thought of the Classical Political Economists (1985).     

Ethics of managing interpersonal conflict in organizations

Although managers spend over twenty percent of their time in conflict management, organization theorists have provided very few guidelines to help them do their job ethically. This paper attempts to provide some guidelines so that organizational members can use the styles of handling interpersonal conflict, such as integrating, obliging, dominating, avoiding, and compromising, with their superiors, subordinates, and peers ethically and effectively. It has been argued in this paper that, in general, each style of handling interpersonal conflict is appropriate if it is used to attain organization's proper end.M. Afzalur Rahim is Professor of Management at Western Kentucky University. He holds B.Com. (Hons.) and M.Com, M.B.A., and Ph.D. degrees. Dr. Rahim teaches courses on organizational behavior, strategic management, and management of organizational conflict. He is the author of over 65 articles and book chapters, five cases, and three research instruments on conflict and power. He is the author of six books, four of which are on conflict management. He is the editor of theInternational Journal of Conflict Management and theInternational Journal of Organizational Analysis. He is the founder of the International Association for Conflict Management and President of the International Conference on Advances in Management.Jan Edward Garrett is Associate Professor in the Philosophy and Religion Department at Western Kentucky University. His recent publications include Persons, Kinds and Corporations: An Aristotelian Perspective, which appeared inPhilosophy and Phenomenological Research, and Unredistributable Corporate Moral Responsibility, which appeared in this journal.Gabriel F. Buntzman is Associate Professor of Management at Western Kentucky University. His current research interests concern relationships between ethics, conflict and the strategic management of organizations. His work in the area of conflict management has appeared in theInternational Journal of Conflict Management, theJournal of Psychology, and three books.     

The market ethic: Moral dilemmas and microeconomics

Brief cases written as multiple choice questions can provide the basis for a classroom game based on business ethics. This teaching note describes the organization of such a game and provides five sample cases.Julianne Nelson is an Assistant Professor of Economics at the Stern School of Business of New York University. She has also taught at the Ecole Superieure de Commerce in Tours, France. Her publications have appeared in theInternational Economic Review, Economics Letters, theJournal of Regulatory Economics, theJournal of Business Ethics, andJapan and the World Economy.I would like to thank my students for their suggestions and support of this project. This research was supported by a grant from the Rundin Foundation.     

Cultural and socioeconomic constraints on international codes of ethics: Lessons from accounting

This paper provides a framework for the examination of cultural and socioeconomic factors that could impede the acceptance and implementation of a profession's international code of conduct. We apply it to the Guidelines on Ethics for Professional Accountants issued by the International Federation of Accountants (1990). To examine the cultural effects, we use Hofstede's (1980a) four work-related values: power distance, uncertainty avoidance, individualism, and masculinity. The socioeconomic factors are the level of development of the profession and the availability of economic resources. We evaluate the applicability and relevance of the accounting guideline, and discuss the implications for accounting and other professions.Jeffrey R. Cohen is Assistant Professor of Accounting at Boston College. He is a CMA and a KPMG Peat Marwick Faculty Fellow. His articles have appeared in theJournal of Accounting Research, Decision Sciences, The Organizational Behavior Teaching Review, andThe International Journal of Accounting. His work on ethics has appeared inJournal of Business Ethics, Issues in Accounting Education, Management Accounting andThe CPA Journal.Laurie W. Pant is Associate Professor of Accounting at Suffolk University. She holds an MBA and DBA and an M.Ed. She is a CMA and serves on the editorial board ofIssues in Accounting Education. Her articles have appeared inJournal of Business Ethics, Issues in Accounting Education, Management Accounting, The Organizational Behavior Teaching Review, andThe International Journal of Accounting.David J. Sharp is Assistant Professor of Accounting at the University of Western Ontario. He received his Ph.D. and M.Sc. He is an ACMA and serves on the editorial board ofJournal of International Accounting Auditing and Taxation. His articles have appeared in theMidland Corporate Finance Journal, Sloan Management Review, andThe International Journal of Accounting.